GLENCORE CEO, Ivan Glasenberg, returned to a favourite theme in questions during the firm’s investor update today saying he “… did not understand” why rival miners kept loss-making assets open.
He also raised the prospect that his company would “walk away” from its 49% stake in the Koniambo nickel mine in New Caledonia.
“We inherited the asset [Koniambo] and we have struggled with it since,” said Glasenberg of the nickel operation that was first established by Xstrata, the company with which Glencore merged in 2013.
“But we are not married to it. If the furnace does not work we will walk away from it. We will not burn cash. This is not Glencore’s style and we won’t do it,” he said.
The budget for Koniambo has risen from an initial $3.8bn to more than $6bn and it has been hampered by cost overruns and disappointing production figures.
“About 60% of the nickel market is cash negative and yet operations stay open,” said Glasenberg. “We don’t understand it; we won’t wait for the markets to turn to justify operations,” he added.
As recently as early October, Glasenberg called on companies to close loss-making production but he lit the touchpaper with most effect at the BMO Capital Markets conference in Florida during 2013 in which he said mining firms had “screwed up”.
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